Does Money Make Us Happier?
Wellbeing is influenced by many things aside from income.
Key points
- Some studies claim that money is associated with greater happiness.
- This blog re-analyzes one study with a "plain stats" approach.
- This analysis suggests money has only a small relationship with happiness.
- Money is important and necessary to some extent, but other things matter too.
- It is often easy to equate money with happiness and success. But does
- money buy us happiness?
One study suggests it might. The author, Matt Killingsworth, claimed the study
Some might take this study as evidence that money does make us happier. But while this study has value, it might be difficult for the average person to interpret: the article is replete with concepts like logarithms, slopes and z-scores—concepts which many are unfamiliar with.
To help us get a better sense of what Killingsworth’s data really says, I want to
To understand the data, we first have to understand how it was collected. The
So what did Killingsworth find once he did this study? To visualize the data, we
And when we do that, we get the following scatter plot (with code and data
The blue line is a so-called “regression line”: it is an idealized representation of
The first is that well-being is influenced by many other things aside from income
But this is not what we see. Instead, we find that well-being differs drastically
The other thing that the line shows is that even though other things influence
But one thing the line does not show is whether income is primarily responsible
To tie all this together, the scatter plot indicates that the relationship between
The scatter plot says income and well-being is like this too. There is a
So while income is undoubtedly important and necessary for the well-being to
re-analyze it here using what I call the “plain stats” approach—an approach
that focuses on presenting the data as clearly, comprehensibly, and accessible
as possible. the study involved an app that asked 33,391 adults “How do you
feel right now?” at random points during their waking hours. The study
collected 1,725,994 responses ranging from “Very bad” to “Very good.” Each
individual’s reports were averaged into an average score representing their
“emotional wellbeing”. This score was then analyzed about their income, as
reported in response to the question “What is your total annual household
income before taxes?”.
available at my website):In the plot, each dot represents an individual—albeit
with some random noise added to make sure that the dots don’t all overlap. The
so-called x-axis represents their income: individuals further to the right reported a higher yearly income than individuals to the left, spanning from those earning
approximately $15k per year up to millionaires earning up to $625k per year.
The y-axis represents their average response to the question “How do you feel
right now?”: individuals further to the top reported feeling better on average
than individuals below. can use a scatter plot—that is, a graph which, in this
context depicts where every individual is concerning both their income and
their wellbeing. In my view, scatter plots are one of the best plain stats tools for
understanding how two things relate to each other, like income and well-being
in this case. But since there are 33,000 people, it would be too messy to
present data for all of those people; so we can instead select a random
sample of, say, 4,000 people which is representative of the results.
. If income was the only thing that impacted well-being, then every single dot
would be on the line, and the only way to have higher well-being would be to
have higher incomes. regardless of income. On the one hand, we see some
individuals with income around $731k who on average report feeling closer to
“Very bad” than “Very good”. On the other hand, we also see some
individuals with incomes closer to $18k who report feeling very close to
“Very good”. This is not surprising, since
we know from both science and experience that many things impact our
wellbeing: our relationships, our work, our health, our leisurely activities, and so
on. well-being, there is still some positive relationship between income and
well-being, but this relationship is very small. If income and well-being were
entirely the relationship between income and well-being. This line and the dots
around it tells us many things. some extent, when we accurately analyze the data with a plain stats approach,
it suggests we should not lose sight of its importance in the scheme of many
relationship between income and well-being, but it is also small, many other
things matter too and it is not clear that income is responsible for the
relationship—as opposed to other things that might be correlated with income,
like self-control and its other consequences.
income and well-being is like the relationship between being tall and being in
New Zealand versus Norway. As it turns out, some websites state that people
are taller in Norway than in New Zealand, but because Norwegians are taller
by only less than an inch, the relationship is small. And beyond that, it is not
clear that being in Norway makes people taller: perhaps Norwegians on
average just happen to be taller for other reasons, like genes or different
patterns of immigration.
for this small relationship. Even if income is associated with higher well-being
, this might be for other reasons: for example, perhaps individuals have higher
incomes because they have the self-control necessary to pursue profitably
avenues and the evidence shows self-control is associated with a range of
other positive outcomes in life that might affect one’s well-being.
unrelated, that line would be flat. However, the slight slope of the line indicates
that there is some relationship, albeit a very small one.
suggested that “higher incomes are associated with both feeling better
day-to-day and being more satisfied with life overall” (p. 1). The study was
Then, it was published in a top journal and made headlines worldwide.
other things that matter—and potentially much more so.
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